According to the abstract on a paper “Socially Responsible Products: What Motivates Consumers to Pay a Premium?” the motivation to pay for fair trade or environmentally-friendly coffee based on socially responsible product labeling “is partly an expression of consumer concern for the well-being of those involved in the production process.” How much the consumer is willing to spend depends on a preference for providing benefits in different ways such as in-kind or cash transfers.
In the study, consumers who prefer in-kind transfers are willing to pay a 52.5 percent price premium over standard coffee. Those who preferred cash were willing to pay a 42.5 percent premium. Those without a preference for in-kind or cash were only willing to pay a 19.2 percent premium.
The paper will be discussed in an AAEA session at the 2016 Allied Social Sciences Association Annual Meeting (ASSA) in San Francisco, CA, Jan. 3-5.
